Ann: FUMA for the period ending 30 June 2019, page-15

Happy to backflip on my previous view of how things will pan out for IFL. No point sitting on the fence when the numbers are outstanding, especially considering the publicity firestorm the IOOF brand has been through. Bodes well for the FY results IMO, and the outlook going forward.

Taking the optimistic view:

I still think that it will be a tougher business now, and margins will be a bit tighter. There is an aspect of competitors being in huge trouble in the retail financial advice space. It is possible that IOOF can acquire FUMA and attract advisor groups if ANZ PI falls over in Oct, and add scale to offset margin loss. All could balance out, along with a Steve Bradbury benefit (they should give him a Cameo appearance in their ads just for legendary ad status - so it will be shown on Gruen Transfer in a decade - free ABC advertising).

Market may even get excited with results coming, possibly the dividends will flow, and dividends are obviously far more valuable today than six months ago due to bond yields etc. They have the OM sale proceeds to hand over if they want to demonstrate no fear of remediation costs - dividend should be 20c at least or much more if they want to make a statement of confidence. They should have plenty of franking credits. Could they afford a 50c fully franked div payment around the end of September??? If they know by then they are terminating the ANZ PI deal it could be higher - I have not worked out what franking credits are available.

Regarding remediation costs - their clients are not running away in droves. I think that needs to be inputted into the factors that could lead to a bigger versus a smaller remediation bill. Where there are problems with unhappy clients who feel cheated, you would expect to have a higher bill. It is possible that a higher level of clients feel loyalty to their advisors than I would have expected. Maybe the remediation bill forecasted by management is based on optimistic advisor figures that have been passed up the chain and accepted at face value, but it cannot be discounted that management may be roughly right.

All IMO